An Obama Proposal To Fund 'Clean' Fossil Fuel Technologies

Ucilia Wang
, ContributorI write about renewable energy, electric cars and water techOpinions expressed by Forbes Contributors are their own.

The U.S. Department of Energy is floating a proposal to offer up to $8 billion in loan guarantees for fossil fuel technology projects that reduce the greenhouse gas emissions, the government said Tuesday.

Those projects could involve coal, natural gas, or oil production, waste heat recovery or carbon dioxide capture and sequestration. The proposal, which is open to public comment for 60 days, is offering a substantial help to the fossil fuel industry and a departure from the administration's previous major loan guarantee program that focused on renewable energy technology and electric cars.

Energy Secretary Ernest Moniz announced the new loan guarantee program just a week after President Obama laid out a plan to support clean power generation and reduce greenhouse gas emissions. The plan includes tighter regulations to lower emissions from existing fossil fuel power plants.

"Coal and fossil fuels still provide 80% of our energy and 70% of electricity, and they will remain an important part of our future, as the president noted," Moniz told reporters during a conference call on Tuesday. "Any serious effort (to deal with climate change) will be important to include deploying fossil sources as cleanly as possible."

Some renewable energy advocates would rather see a gradual closure of fossil fuel power plants, especially ones that burn coal, and replacing them with renewable sources such as wind and solar. The new loan guarantee program would help the fossil fuel industry deal with the tougher emission regulations that the president referred to last week and likely prolong our reliance on fossil fuels as the primary energy sources.

The energy department has issued a draft proposal for the program and is looking for suggestions that could end up expanding the types of technologies that would be eligible for a loan guarantee. The department plans to finalize the proposal and issue a formal request for project proposals this fall. In the previous loan guarantee program that focused on renewable energy, the federal government would either issue a loan guarantee and also offer the loan itself, or guarantee part of a loan offered by private financial institutions.

The previous program has issued about $34.4 billion in loan guarantees and commitments to offer guarantees for 33 projects. Its recipients included Solyndra and its failed attempt to stay competitive in the solar market and
Tesla Motors which has repaid its loan early.